EADS refuelling contract up in the air

A 22 billion euro contract to supply refuelling planes to the US Air Force is up in the air after government auditors in Washington ruled there were “significant errors” in the process of awarding it to EADS and its US partner Northrop Grumman.

The decision was welcomed by US politicians. Democrat Senator Patty Murray, who represents Washington, the state where EADS rival Boeing makes its planes, said: “That this competition brought forth a wrong decision has been validated by the GAO in a very, very strong way. And that is good news for American workers, its good news for our national security and it’s good news for our economy.”

The ruling by the US Government Accountability Office follows protests from Boeing which was bidding with a tanker version of its 767 passenger plane. One reason the US Air Force says it chose the EADS Northrop Grumman offering – based on the Airbus A330 – is because it can carry more fuel.

The news pushed down EADS’ shares along with those of Northrop Grumman, while Boeing’s stock rose. It is the latest setback for the European aerospace and defence contractor. Boss Louis Gallois is already struggling with delays to its A 380 superjumbo and the A 400M military transport plane.

It is not guaranteed that Boeing will now get the refuelling aircraft contract. The US Air Force has to respond to the Government Accountability Office decision within 60 days, but does not have to automatically re-open the bidding process.

The GAO recommended that the Air Force hold further discussions with both companies and make a new decision.